You may have noticed an advertisement that ran several times during the Super Bowl Sunday night. A woman so devastated, she didn’t realize she was dumping the gravy boat all over the table.  A man, so furious at the money he could have saved selling his home, that he smashed his ceramics clay into the face of his classmate.

Stark images, stark contrast to reality.

Purple Bricks is a UK company that recently purchased ComFree in Canada. Anyone familiar with selling their home is aware of ComFree and what it represents. This is not a full service company. It is ComFree with an enormous marketing budget.

For some, that is exactly what they are looking for -- no seller agent fees, no middle man, complete control over the process. For most, this is not the dream it is made out to be. Dealing with all the paperwork, lawyers, brokers, angry buyers, cut throat agents... it can be a real challenge when you aren't prepared.

Here are 5 misconceptions about discount brokerages like Purple Bricks:

 

1. You Pay no Commissions

This is the biggest misconception -- if I list my own home, I don't pay anything. While you don't pay commissions to an agent representing you, there are many other considerations.

The biggest issue is that you will still have to pay the buyer's agent. Statistically, 90% of transactions with a discount brokerage still pay commission to the buyer's agent. Therefore, the real savings are less than half of what is advertised.

Additionally, for a typical discount brokerage, you will still pay fees up front. Purple Bricks costs $799 for basic listing services, property photos and sales consulting. You will be responsible for all showings and negotiations unless you pay additional fees starting at $399. These fees are non-refundable, whether your house sells or not.  In the case of a full service brokerage like CIR, you will not pay a cent until your house sells unless otherwise agreed to between you and your REALTOR®. Best of all, the stress of all these services will be trusted with the expertise of an agent, who is highly trained and will ask for your approval every step of the way to make sure you are comfortable.

2. You have full access to an expert agent in your area

First it should be noted, that many discount brokerages are very small -- Purple Bricks, for example, has only 23 REALTORs® in Calgary. While I don’t doubt that they are great REALTORs®, it is impossible for them to have an expert in every market at this size. CIR has over 700 agents in Alberta, so even if your agent doesn’t have experience in one area, they have quick access to someone who does.

Depending on the discount brokerage, you may or may not have access to speak to a REALTOR® when one is available. I'm sure in those cases, they will answer any question you may have. The difference is in what you might call the "Unknown Unknowns". Even if you have an expert on call, you can't ask questions you don't know you should ask. This could lead to issues like lacking a current Real Property Report with only a few days to close, and finding out that your deck is over a service right-of-way once you get a new survey completed. This can blow up a deal, causing a lawsuit, or cost you thousands more to rectify than if it was dealt with early when recognized by your agent.

If you are well versed in the real estate transaction process, maybe you have nothing to fear. But those who do not consider themselves experts risk missing out on critical precautions that a REALTOR® will take when they are in control of the process.

3. It's easy to price and sell a home

Currently, as a consumer, you do not have access to sold prices. This will soon change in Canada. However, this does not mean that you will suddenly have the ability to evaluate your home correctly.  There are many factors to consider, including location, micro-markets within neighborhoods, actual value of renovations versus perceived value, other homes currently on the market, and many others that only become obvious through experience and training.

Purple Bricks goes as far as to offer the services of an expert agent to price your home. Aside from the fact that there is no guarantee they are an expert in your area (see 2), this fails to account for the ever changing climate as your home sits on the market. A full service agent will monitor freshly sold properties, new homes on the market, and macro-economic conditions, all of which may significantly affect the recommended list price of your home. While the discount brokerage agents might be able to do this if you ask, it is impractical for many sellers to keep on top of so many factors while also working a full time job and dealing with family and life.

The longer your house sits, the more likely it is that you will need to continue dropping the price, and you may lose well more on the sale price than the commissions you saved. It is critical that someone is constantly keeping track of market conditions to make sure the house is always at the proper listing price. If you don't think this person is you, then perhaps it is best to consult the services of a full service brokerage like CIR Realty.

4. Everything is online now

There is a lot of information online these days. Contracts, tutorials, property listings, and the phone numbers of thousands of experts are at your fingertips. But the reality is that Real Estate is still a people business, and a complicated one at that. There are a lot of phone calls that go into every transaction to make sure the lawyers are kept out of it and things happen on time, and no online tutorial is going to cover everything.  On top of that, the contacts that a REALTOR® has in the industry are invaluable in getting your home sold quickly, which is the key to getting the best price.

Although the majority of buyers are looking online, it is often their REALTORs® that point them in a given direction. By accessing their network, your REALTOR® can point the eyes of hundreds of agents and potential buyers towards your property through their own social media accounts, targeted advertisements, and daily contact with other real estate professionals. Unless you are a social media guru, few will leverage their online presence towards selling your property as well as a REALTOR® can.

5. I’m protected from fraud

 

 

When you work with a discount brokerage, you might think that because you are working with a brokerage, you are protected in the case that you are damaged by fraudulent activity. The truth is that if you are not represented under a Buyer Brokerage agreement assigning an agent on your behalf, you do not get the benefits of the REIX fund – the Real Estate Insurance Exchange fund. All REALTORs® pay into this fund monthly to protect consumers against damage from negligence or fraud. When you are represented by a full service brokerage, you have the benefit of knowing that even if catastrophe strikes, your wallet will be safe and sound.

When you're ready to speak to a Real Estate Professional about your property, call, text or email to set up an appointment and I can answer any questions you might have and get you started on the road to your next home.